The Federal Government has launched a new N20 billion auto finance scheme, aimed at providing single-digit loans to citizens seeking to purchase locally assembled vehicles. This initiative, which is a key component of the Nigerian Automotive Industry Development Plan (NAIDP), has drawn both excitement and skepticism from stakeholders in the auto industry.
While the move is hailed as a step towards promoting domestic vehicle production, many in the sector argue that it is long overdue. The scheme, introduced by Creditcorp in partnership with the National Automotive Design and Development Council (NADDC), is designed to stimulate demand for brand-new vehicles manufactured locally.
The scheme has been described as critical to the success of NAIDP, a policy that has faced challenges in implementation for over a decade. However, some experts and industry players believe the scheme may have come too late to make a significant impact on the local auto market.
The auto finance scheme, which will use the N20 billion fund, is set to finance up to 500 vehicles, at an average cost of about N35 million each. However, this raises concerns regarding the affordability of the vehicles for many Nigerians. Some stakeholders argue that the amount of funding available will only enable the purchase of less than 600 vehicles, far fewer than what the industry needs to truly drive the demand for locally assembled vehicles.
Innoson Vehicle Manufacturing (IVM), one of the leading manufacturers of locally made cars, offers models with prices ranging from N25 million to N35 million. Some of their higher-end models cost as much as N100 million. With the current exchange rate, many Nigerians are already struggling to afford new vehicles, and the price of used cars, also known as “Tokunbo,” has skyrocketed.
Mr. Joseph Osanipin, the Director-General of NADDC, expressed optimism about the scheme’s potential to boost the local automotive sector. He highlighted that the scheme would not only provide accessible loans to Nigerians but would also help create jobs and enhance the local manufacturing industry. He said, “This scheme is an opportunity for Nigerians to own new vehicles, made right here in the country. It’s a win-win for both consumers and the economy.”
Despite the positive intentions, many stakeholders are wary about the scheme’s timing. They believe that the N20 billion allocated is insufficient to meet the needs of the growing number of Nigerians who are seeking to buy new vehicles. For instance, a single car priced at N35 million could easily eat up a large portion of the fund, leaving little room for widespread participation in the scheme.
The concerns regarding affordability are compounded by the fact that many Nigerians are still recovering from the economic effects of the recent currency devaluation. With inflation rates high and purchasing power low, the auto finance scheme may only benefit a small, elite portion of the population.
Furthermore, some stakeholders argue that the focus should have been on making the vehicles more affordable for the average Nigerian. While the low-interest loans are a step in the right direction, they point out that without tackling the high prices of the cars, the scheme may fall short of its goals.
“We need to address the root cause of the problem, which is the high cost of the vehicles,” said one industry expert who wished to remain anonymous. “A loan is only a temporary solution if the cars are still out of reach for most Nigerians. The government needs to work on making local vehicle prices more competitive with used imports.”
In response to these concerns, the NADDC has emphasized that the scheme is just the beginning of a broader effort to support the local auto industry. According to Osanipin, the government is planning additional measures to boost the competitiveness of locally assembled cars. “This scheme is part of a long-term plan to make Nigeria a leader in automobile manufacturing in Africa,” he stated.
The N20 billion scheme also aims to reduce Nigeria’s reliance on used vehicle imports, which have flooded the market in recent years. Many Nigerians have turned to “Tokunbo” cars, which are often seen as more affordable options. However, due to the rising cost of these used vehicles, the government hopes that the finance scheme will make new cars more attractive.
